News emerged that the Microsoft proposal to Yahoo! would be to buy its search business and have the portal keep its content operations and sell its foreign investments.
Earlier this month, Microsoft walked away from the proposal to acquire Yahoo for $47.5 billion, or $33 per share,after Yahoo rejected the offer, saying it would only settle for $37 a share.
Microsoft Corp Chief Executive Steve Ballmer said on Friday that buying Yahoo was not a strategy in itself, and dropping the bid meant it now had $50 billion to spend on other acquisitions.
"Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business," he told a packed hall at a technology conference in Moscow.
"We will spend money on some acquisitions. You can do a whole lot of things with 50 billion dollars," he said.
Now Microsoft has made an alternative offer, proposing to buy Yahoo's search business and take a minority stake in the web firm.
As part of the deal, Yahoo would put its Asian assets, including significant minority stakes in yahoo Japan and china's Alibaba Group, up for sale , while Microsoft would buy a chunk of that which remains of the company.
The new deal, if completed would forge an alliance between the two companies that would represent an alternative means of competing with rival Google.
